Shares of Burlington Stores are rising on better-than-expected results

Key takeaways

Burlington Stores reported earnings and sales that beat forecasts as it reduced inventory and attracted more shoppers at the end of the first quarter.
The retailer’s off-price gross margin improved as promotions were limited and transportation costs were reduced.
The news sent Burlington Stores shares to their highest level in over two years.

Shares of Burlington Stores (BURL) soared as the lower-than-expected clothing retailer posted better-than-expected results and strong guidance for inventory reduction and demand growth later in the first quarter.

The company reported quarterly net income of $78.5 million, more than double the same period in 2023. Adjusted earnings per share (EPS) were $1.42 and revenue increased 11% to $2.36 billion . Both exceeded forecasts. Comparable store sales increased 2%.

Overall gross margin increased to 43.5% from 42.3% a year ago. Merchandise gross margin increased by 90 basis points (bps) as the company reduced promotions, and transportation cost improvements increased by 30 bps.

Burlington stocks dropped a year ago

Merchandise inventories fell 7% to $1.14 billion from $1.23 billion a year earlier, and comparable store inventories fell 6%.

Chief Executive Officer (CEO) Michael O’Sullivan noted that the quarter “started slowly in February,” which he believed was likely due to poor weather and delayed tax refunds. However, sales trends have since improved, with comparable store sales increasing a combined 4% in March and April.

The company forecasts full-year adjusted EPS of $7.35-$7.75, with the average above analyst estimates.

Shares of Burlington Stores rose 18.6% as of 1:10 p.m. ET on Thursday to $237.66, their highest level since early 2022.